Royal Caribbean Tops Q2 Earnings Expectations, Raises Full-Year Guidance, But Shares Fall

Royal Caribbean (NYSE:RCL) is a prominent player in the Leisure and Recreation Services sector, known for its extensive cruise offerings. The company competes with other major players like Carnival Corporation and Norwegian Cruise Line. On March 25, 2025, Susquehanna reaffirmed its Positive rating for RCL, advising investors to hold their positions. At that time, RCL's stock price was $225.02.

Investors looking for value stocks in this sector might consider RCL and Airbnb, Inc. (ABNB). According to Zacks Investment Research, RCL holds a Zacks Rank of #2 (Buy), indicating a stronger earnings outlook compared to Airbnb's Zacks Rank of #3 (Hold). This suggests that RCL may be a more attractive option for value investors due to its improved earnings estimates.

RCL's stock price of $225.02 reflects a slight decrease of 0.38, or approximately -0.17%. The stock has traded between $223.17 and $227.32 today. Over the past year, RCL's stock has seen a high of $277.08 and a low of $125.06, showcasing its volatility in the market.

The company's market capitalization is approximately $60.56 billion, indicating its significant presence in the industry. With a trading volume of 1,677,291 shares on the NYSE, RCL remains an actively traded stock, attracting the attention of investors and analysts alike.

• Royal Caribbean Group (NYSE:RCL) reported an earnings per share (EPS) of $1.63, surpassing the estimated $1.50.
• The company achieved year-over-year revenue growth, increasing from $3.33 billion to $3.76 billion, despite slightly missing estimates.
• Royal Caribbean's stock price experienced positive movement, reflecting the fourth consecutive quarter of surpassing consensus EPS estimates.

Royal Caribbean Group, listed as NYSE:RCL, is a prominent player in the cruise industry, offering a wide range of vacation experiences through its diverse fleet. The company competes with other major cruise lines like Carnival Corporation and Norwegian Cruise Line Holdings. On January 28, 2025, Royal Caribbean reported earnings per share (EPS) of $1.63, exceeding the estimated $1.50, showcasing its strong financial performance.

During the Q4 2024 earnings call, key figures like CEO Jason Liberty and CFO Naftali Holtz discussed the company's financial results and strategic initiatives. Despite revenue slightly missing the $3.76 billion estimate, the company achieved year-over-year growth, with revenue increasing from $3.33 billion in the same period last year. This growth is attributed to strong pricing and onboard revenue strength.

Royal Caribbean's stock price saw positive movement following the earnings release, as highlighted by the Zacks Consensus Estimate. The company reported an 8.67% earnings surprise, with EPS improving from $1.25 in the previous year. This marks the fourth consecutive quarter of surpassing consensus EPS estimates, reflecting consistent financial performance.

The company's financial metrics provide insight into its market valuation. With a P/E ratio of 25.10, investors are willing to pay $25.10 for every dollar of earnings. The price-to-sales ratio of 4.38 and enterprise value to sales ratio of 5.62 indicate the market's valuation of Royal Caribbean's revenue and total worth. However, a debt-to-equity ratio of 2.75 suggests significant reliance on debt financing.

Despite these financial achievements, Royal Caribbean faces potential liquidity challenges, as indicated by a current ratio of 0.17. This ratio measures the company's ability to meet short-term obligations, and a low value may suggest difficulties in covering these liabilities. Nonetheless, the company's earnings yield of 3.98% offers a return on investment for shareholders, highlighting its profitability.

Daniel Politzer of Wells Fargo has recently updated the price target for NYSE:RCL, Royal Caribbean, to $165, which is a 15.5% increase from its current trading price of $142.86. This adjustment, reported on May 17, 2024, by TheFly, reflects a growing confidence in the cruise operator's financial health and market performance. Royal Caribbean, known for its luxury cruise services, has been navigating through the competitive waters of the travel and leisure industry, facing off against rivals with its innovative offerings and global presence.

The optimism from Wells Fargo aligns with the broader sentiment among Wall Street analysts. With an average brokerage recommendation (ABR) of 1.39, indicating a position between Strong Buy and Buy, Royal Caribbean enjoys a favorable outlook from the investment community. This rating, derived from the assessments of 18 brokerage firms, showcases a strong vote of confidence, with 14 analysts recommending a Strong Buy and one advocating for a Buy. This consensus underscores the analysts' belief in Royal Caribbean's potential for growth and positive stock movement.

Supporting this positive outlook is Royal Caribbean's impressive financial performance. The company's shares have surged by 90% over the past year, propelled by better-than-expected financial results for the first quarter of 2024 and a promising forecast for the remainder of the year. On April 25, Royal Caribbean raised its full-year adjusted earnings per share (EPS) projection to between $10.70 and $10.90, up from earlier estimates. This adjustment points to a record-high adjusted EPS for 2024, signaling a significant turnaround and robust future for the company.

The cruise operator's success can be attributed to its ships operating at full capacity, with passengers spending more onboard, thus enhancing profitability. Additionally, Royal Caribbean has effectively managed its substantial debt, even lowering the interest rate on some of its obligations. These strategic financial maneuvers, coupled with strong operational performance, are key drivers behind the optimistic earnings forecast.

As Royal Caribbean's stock reached its highest price for the year at $144.339, up significantly from its year-low of $76.31, the company's market capitalization has grown to approximately $36.76 billion. With a trading volume of about 2.54 million shares, the company's financial health and strategic positioning suggest a compelling investment opportunity, as indicated by the recent price target adjustment and the strong confidence from analysts and investors alike.

Shares of Royal Caribbean (NYSE:RCL) saw a rise of over 2% intra-day today due to impressive third-quarter results and an upward revision in their guidance.

For the third quarter, the cruise company posted an adjusted EPS of $3.85, surpassing the expected $3.47. Their revenue also witnessed a 39% growth, reaching $4.16 billion and exceeding the anticipated $4.05 billion.

The superior performance, as stated by the company, can be attributed to heightened demand in last-minute bookings and a notable increase in onboard revenue.

Moreover, based on the robust demand and continued onboard revenue growth, Royal Caribbean raised its forecast for the full-year adjusted EPS to a range of $6.58 to $6.63, which is considerably higher than the previously estimated consensus of $6.15.

Royal Caribbean (NYSE:RCL) reported its Q4 results on Tuesday, with EPS coming in at ($1.12), compared to the Street estimate of ($1.31). Revenue was $2.6 billion, roughly in line with the Street estimate of $2.61 billion. Following the earnings announcement, shares surged more than 7% on Tuesday.

The company and cruise peers are benefiting from strong demand and general price insensitivity across the broader travel vertical. It’s pretty clear that the company is operating at an extraordinarily high level right now, in terms of controlling costs while striking an optimal balance of pricing and volume growth.

The company expects Q1/23 EPS to be in the range of ($0.65)-($0.85), compared to the Street estimate of ($0.80). For fiscal 2023, the company expects EPS in the range of $3.00-$3.60, compared to the Street estimate of $3.25.